Why the Genworth (ASX:GMA) share price is tumbling 6% today

The Genworth (ASX:GMA) share price is taking a dive this morning after release of the company's full year 2020 results. Here's the lowdown.

Gretchen Kennedy

Gretchen grew up in a small Connecticut town where she learned to read The Wall Street Journal as part of the grade six enrichment program. She moved to Australia in 2002, earned a Master of Arts (Professional Writing) and went on to spend eight years writing on Wall Street. In June 2018, Gretchen returned to Australia and has since developed a keen interest in all things ASX. In December 2020, she started writing for the Motley Fool. Gretchen's usually writing something, reading a book or chasing her dogs around.

Published February 12, 2021 12:07 pm AEDT

Genworth Mortgage Insurance Australia Ltd (ASX: GMA) shares are tumbling lower today after the company released its financial results for the full year ending 31 December 2020 (FY20). At the time of writing, the Genworth share price has fallen 5.65% lower to $2.67.

falling asx share price represented by woman falling through mid air — Image source: Getty Images

Why is the Genworth share price sinking?

The Genworth share price is on the slide today after the business reported an underlying net loss after tax of $104.3 million for FY20. This compares to a $97 million net profit after tax during FY19.

The company experienced an underwriting loss of $234 million for the period. The FY19 underwriting result was $42.1 million.

Genworth reported it would not be declaring an interim or final dividend due to the uncertainty surrounding coronavirus and the current economic environment. The board advised that it remains committed to resuming dividend payments when appropriate.

Genworth maintained a cash and investment portfolio worth $3.4 billion as at 31 December 2020.

The company's net-earned premium was higher for the period, totalling $312 million in FY20 compared to $298.2 million in FY19. Gross written premium jumped 29.7% from $433.2 million in FY19 to $561.7 million in FY20.

CEO comments

Addressing the company's losses, Genworth Chief Executive Officer and Managing Director Ms Pauline Blight-Johnston said:

Genworth's FY20 results were materially impacted by the effects of COVID-19 on the economy. While the business achieved strong toppling volume growth in Gross Written Premium (GWP), our Statutory and Underlying net profit after tax (NPAT) losses were affected by an increase in reserving to reflect anticipated future claims outcomes arising from the economic impacts of COVID-19.

Ms Blight-Johnston added:

Importantly, Genworth remains in a strong capital position, able to withstand a wide range of future claims and outcomes.

Genworth share price snapshot

Genworth provides lenders mortgage insurance (LMI) as well as capital and risk management solutions in Australia.

Over the past 12-months, the Genworth share price has fallen by around 30% after being hammered in the March 2020 bear market.

Based on the current Genworth share price, the company commands a market capitalisation of around $1.2 billion.

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